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The good news about housing prices - And the bad

If you're looking to buy, it's great news, but if you already own, it's terrible: According to new evidence, Canadian home
prices could decline by 20 per cent, may not hit bottom until late 2011. It could be seven years or longer before prices recover to today's levels.
Maclean's senior editor Duncan Hood reveals a frightening new forecast made by a brand new housing futures market. The new market allows sophisticated investors to bet on where house prices are going, and it predicts that prices will fall by much more than most economists are predicting right now.
Many economists are currently saying that we'll just see a short dip in house prices this year, and the recovery will roar into action by next year.
But lately, they've been having trouble getting their predictions right. As one Vancouver buyer has already discovered, you have to be careful about believing the real estate predictions you see in the news. He made a presale payment on a new condo this past summer, only to see the price of his new place go into free-fall. Now he's being forced to back out of the deal, and he's in danger of being sued by the condo owner for the difference-likely more
than $300,000.
So who's right? The economists who see a quick rebound, or the futures market which predicts that prices will stay down for years? Famous economist Robert Shiller, a Yale professor and creator of the internationally respected S&P/Case-Shiller Home Price Index, says that he saw a similar situation in the
U.S. just before their housing bust, and it was the futures market that got it right. He adds that we should be critical of forecasts made by economists who work in the real estate business as they are biased and under pressure to predict relatively rosy markets. Given this, he would bet his money on the prediction made by our futures market.
But if the futures market is right, what will it mean for Canada? On the positive side, for some, owning a house will finally fall into their grasp. On the down side, it will mean more lawsuits against buyers caught by tumbling prices, and a huge drop in the wealth of Canadians across the country.